New orders for long-lasting U.S. manufactured goods took a surprise tumble last month, while Hurricane Isabel pushed down new jobless claims last week, according to two reports on Thursday that offered a mixed read on the economy’s health.
ORDERS FOR DURABLE goods, items intended to last three years or more, decreased 0.9 percent in August, the Commerce Department said. It was the first decline since April and bucked expectations on Wall Street for a 0.6 percent rise.
While the report suggested a pickup in manufacturing activity might not be as robust as some analysts had expected, the department did revise up its figure for durable orders in July to a 1.5 percent gain from the previously reported 1 percent advance.
In a separate report, the Labor Department said initial claims for unemployment aid, which give an early reading on the resilience of the labor market, fell further than expected to 381,000 last week from a revised 400,000 a week earlier.
Wall Street economists had forecast new claims at 400,000 compared to the previously reported 399,000 in the prior week.
A key factor in the drop was the hurricane which swept through the eastern United States late last week, hindering residents from filing claims at government offices.
“About 50 percent of the decline is a result of the power outages from Hurricane Isabel that forced the closure of state offices in such areas as North Carolina, Virginia, Maryland, the District of Columbia,” a department spokesman said.
The center of the storm made landfall on September 18 on North Carolina’s Outer Banks, then charged to the northwest through central Virginia.
“A mixed bag” was how IDEAGlobal currency strategist Sean Callow described the batch of data, which did little to provide direction one way or the other to the markets.
The report on costly durable goods showed that excluding transportation, orders were off a more modest 0.3 percent. The department said demand for transportation equipment dropped 2.2 percent, pulled down by a 7.5 percent plunge in orders for motor vehicles and a 9.6 percent falloff in civilian aircraft.
Overall capital goods orders rose 2.2 percent, but behind the gain was a 35.3 percent increase for the military.
Non-defense capital goods orders actually fell 2 percent and those orders excluding aircraft, which many economists look to as a sign of business investment plans, slid 0.8 percent. The report suggested a long-sought pickup in business spending was proving a bit weaker than many had hoped, although figures for July were bumped up a bit.
Federal Reserve officials had welcomed the recent pickup in capital goods orders as a sign a long dearth in business spending was finally easing. A collapse in business investment led the economy into recession in early 2001 and officials have said a revival is needed to ensure a broad-based, sustainable economic expansion.
Fed Governor Donald Kohn said on Wednesday there were signs “the sense of gloom” among businesses was lifting, though firms were still hesitant to increase hiring or rebuild inventories, which are at historically low levels in relation to sales.
The decline in first-time jobless claims brought them to their lowest level since early February — but economist eyed more closely a four-week moving average of filings, which dampened the hurricane’s impact on the numbers and suggested the pace of layoffs may not be showing any real slowdown.
The average dipped only slightly to 407,000 in the Sept. 20 week from 411,000 in the previous week. It was the fourth straight week claims have been above the 400,000 mark, which economists see as a dividing line between a deteriorating and an improving jobs market.
In a somewhat more hopeful vein, the report showed the number of people continuing to draw a week of benefits fell by 28,000 to 3.63 million in the Sept. 13 week, the latest week for which figures are available. Still, the overall trend remains high, suggesting people are still having a tough time finding work.
The Labor Department is slated to release its employment report for September on October 3. Analysts polled by Reuters expect it to show the economy shed 15,000 jobs outside the farm sector this month after losing 93,000 in August.
The employment rate is expected to rise to 6.2 percent after 6.1 percent in August.
© 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.